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eBay Acquires Stake in Craigslist

The online auction company buys an existing 25-percent equity stake in Craigslist and says the two companies will share knowledge on growing online communities.

eBay Inc. has acquired a minority investment in venerable online bulletin board Craigslist, a move that both companies said would let them share each others expertise in building online communities.

Terms of the deal were not disclosed, but the investment came from an existing equity stake in Craigslist of about 25 percent, the companies announced on Friday.

In his Weblog, Craigslist founder Craig Newmark made clear that the deal resulted from a former employee seeking to sell his equity to eBay and not from Craigslist actively pursuing eBay.

"Although I never figured that part of craigslist might be owned by a public company, [President and CEO] Meg Whitman and [Chairman] Pierre Omidyar showed that they were interested in us for all the right reasons," Newmark wrote of eBays top executives.

San Francisco-based Craigslist, founded in 1995, runs community sites in 45 cities that focus on classified ads for selling goods, finding a job and meeting people, as well as discussion forums. It has about 5 million users each month, according to its Web site.

eBay spokesperson Hani Durzy declined to provide specifics about how involved eBay would be in Craigslist, such as whether it will hold a board seat, but said that both companies plan to "share expertise and resources" to help build each others business.

"Because it is a minority stake, both Craigslist and eBay will continue to run their respective businesses as they see fit," Durzy said.

A Craigslist spokesperson could not be immediately reached for comment. In his blog post, though, Newmark assured users that Craigslist would not alter its community focus.

"The deal were announcing today basically allows us to operate without changing our mission of community service, while making available to us expertise and resources we could really use," he wrote.

eBay, of San Jose, Calif., was interested in Craigslist because both companies run popular community-focused sites, Durzy said. In particular, while eBay runs the largest online auction site, it does not offer the type of local classified ads that are the bread and butter of Craigslist.

"Their business model and ours are complementary," Durzy said. "The goal is for us to learn more about the classified business model, how it works and where it works."

Earlier this month, Craigslist added a $25 fee for the posting of job listings on its New York and Los Angeles sites. Craigslist, which already had charged for job postings on its San Francisco site for six years, told the Associated Press that it might expand job-listing fees to more city sites later this year

Publicly held eBay said it does not expect its minority stake in Craigslist to affect its third-quarter or full-year earnings.